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Investing.com — Workhorse Group Inc (NASDAQ:WKHS) soared 32%, to $19, an all-time high, after announcing financing of $70 million. Shares were trading at $1.47 in mid-March
The electric van maker has entered into a financing agreement with a single institutional investor for a $70 million senior secured convertible note. The proceeds will be used for current operating working capital and other general corporate purposes.
“With this note in place, we have much greater financial flexibility to support our current and future production needs,” said Workhorse CEO Duane Hughes. “Heading into the second half of the year, we’ll be looking to meet our previously stated annual delivery target, which should have us in a strong position to accelerate our production ramp into 2021.”
Workhorse has four buy ratings and no sells or holds, with an average price target of $11.13, according to MarketWatch.
The company recently received federal approval for its all-electric vans. After being delayed because of the coronavirus, Workhorse said earlier this month that it had successfully completed Federal Motor Vehicle Safety Standards (FMVSS) testing for its C650 and C1000 delivery vans.
The note will rank pari passu with Workhorse’s senior secured convertible note issued in December 2019 and senior to all other debt and is convertible into common stock by the investor at $19 per share, or 131% of the closing price of Workhorse’s common stock on June 29.
The note matures on July 1, 2023 and contains a 4.5% annualized coupon to be paid quarterly in either cash or stock beginning October 1, 2020. In addition, Workhorse may be required to redeem up to $3.5 million of principal in monthly installments in either cash or stock beginning October 1, 2020.
“This financing will also allow us to continue to pursue a credit revolver, which we believe is the best financing vehicle for ramping up production,” Workhorse CFO Steve Schrader said in a statement. “We expect these proceeds to provide corporate operating funds for the foreseeable future.”
